Counts v. Meriwether

District court dismisses breach of contract and conversion claims in lawsuit brought by two screenwriters who alleged defendants used script to create television series "New Girl," holding breach of contract claim was time-barred and conversion claim was preempted by Copyright Act.

Screenwriting duo Stephanie Counts and Shari Gold sued more than 20 defendants for copyright infringement, breach of implied-in-fact contract and conversion, for allegedly using their script for the pilot episode of the popular television series “New Girl.” Defendants moved to dismiss the breach of implied-in-fact contract and conversion claims, asserting that the implied-in-fact contract claim is time-barred and that the conversion claim is preempted. The district court granted the motion to dismiss.

California law recognizes an implied-in-fact claim when a writer alleges that he or she submitted material to a producer with the understanding that the writer expects to be paid if the producer ever uses the submitted concept. These claims are subject to a two-year limitation period, which generally is deemed to accrue on the date the work is released to the public. Plaintiffs admit that they filed the case outside of this period, but asserted that either equitable tolling or equitable estoppel prevents their claim from being time-barred. Based on precedent holding that equitable tolling applied where a plaintiff’s attorney is incapacitated due to a car accident, for example, plaintiffs argued that their prior counsel had a conflict of interest that was known to defendants, and that prior counsel’s conflict of interest was “incapacitating.”

To establish that equitable tolling applies, plaintiffs were required to allege timely notice and a lack of prejudice to the defendants, and that they acted reasonably and in good faith. In California, equitable tolling of the statute of limitations has only been applied where a plaintiff is pursuing an alternative remedy in another forum; when a lawsuit is erroneously dismissed and the plaintiff filed an untimely second action; where a defendant fraudulently conceals the cause of action; and in certain actions against an insurer. To establish equitable estoppel, plaintiffs must show that the defendants knew the facts; intended that their conduct be acted upon or must so act that the plaintiffs had the right to believe that it was so intended; that the plaintiffs must be ignorant of the true state of facts; and that the plaintiffs replied upon the conduct to their injury.

The district court found that equitable tolling did not apply, because even though plaintiffs’ former counsel had a conflict of interest, plaintiffs consented to their continued representation, and they pled no facts indicating prior counsel improperly refused to file suit or prevented plaintiffs from filing suit. Likewise, the district court found that equitable estoppel did not apply. Plaintiffs failed to plead facts (as opposed to conclusory arguments) showing that defendants engaged in bad faith or “unserious” settlement negotiations by dealing with plaintiffs’ prior counsel, the district court pointed out.

With respect to plaintiffs’ conversion claim, the district court held that it was preempted by the Copyright Act. To state a conversion claim under California law, a plaintiff must establish three elements: (1) her ownership or right to possession of a certain piece of property; (2) the defendant’s conversion of the property by a wrongful act or disposition of property rights; and (3) damages. Noting that a conversion claim for tangible property may contain an extra element beyond unauthorized use copyrighted because that claim would require the plaintiff to prove that the defendant wrongfully obtained possession over a specific piece of property, the court concluded that where, as here, the plaintiff was seeking damages from a defendant’s reproduction of copyrighted work, rather than the return of a piece of tangible property, the conversion claim is preempted. The district court also concluded that the tort of conversion does not apply to ideas under California law.